Shri Jayantilal R. Parekh, Surat V. The DCIT,Circle 6, Surat

ITA 1456/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0041 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 16-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Opportunity of being heard
• Section: 133A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ ITA NO. 1456/AHD/2013 / ASSESSMENT YEAR : 2009-10 SHRI JAYANTILAL R. PAREKH, 2, SADHNA TOWER, PATIDAR GIN, COMPOUND STATION ROAD, BARDOLI 394601,DIST. SURAT PAN : AAYPP 6687 Q VS DCIT, CIRCLE-6, SURAT / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI RASESH SHAH, AR REVENUE BY : SHRI PRASOON KABRA, SR DR / DATE OF HEARING : 07/09/2016 / DATE OF PRONOUNCEMENT: 11/11/2016 / O R D E R PER R.P. TOLANI, JUDICIAL MEMBER:- \ THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, SUR AT DATED 12.03.2013 FOR ASSESSMENT YEAR 2009-10. 2. THE SOLITARY GROUND RAISED IS AS UNDER:- ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LD.CIT(A) HAS ERRED IN PARTLY CONFIRMING THE AD DITION OF RS.62,25,061/- OUT OF THE TOTAL ADDITION OF RS.70,87,000/- MADE BY ASSESSING OFFICER ON ACCOUNT OF EXCESS STOCK FOUND DURING SURVEY U/S 133 A OF THE ACT, 1961. 3. THE BRIEF FACTS ARE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE OF GOLD ORNAMENTS IN A SMALL TOWN OF BARDOLI, IN THE N AME AND STYLE OF AKSHAR JEWELLERS. A SURVEY U/S 133A OF THE ACT WAS CARRIE D OUT AT THE ASSESSEES BUSINESS PREMISES ON 19.02.2009. DURING THE COURSE WHEREOF, IT WAS FOUND THAT AS PER BOOKS THE GOLD ORNAMENTS IN THE STOCK O F THE ASSESSEE WERE TO THE ITA NO. 1456/AHD/2013 JAYANTI R. PAREKH VS. DCIT AY : 2009-10 2 TUNE OF 2948.360 GM WHOSE VALUE CAME TO AT RS.26,76 ,235/- AT THE RATE OF 907.7 PER GM; AS AGAINST WHICH, ACCORDING TO SURVEY PARTIES, THE ACTUAL INVENTORY STOCK CAME TO 8198.1 GM, I.E. EXCESS OF 5 240.64 GM WAS FOUND. THE EXCESS OF STOCK WAS WORKED OUT AT RS.70,87,000/- AN D EXCESS CASH OF RS.4,24,141/- WAS FOUND AND TOTAL ADDITION OF RS.75 ,11,141/- WAS PROPOSED. THE ASSESSEE AGREED FOR THE DISCLOSURE OF THE SAID INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE DI SCLOSED INCOME WAS NOT OFFERED IN THE RETURN OF INCOME AS ADMITTED DURING THE COURSE OF SURVEY STATEMENTS. A SHOW CAUSE NOTICE WAS ISSUED TO THE A SSESSEE IN THIS BEHALF. THE ASSESSEES WRITTEN SUBMISSION IS REPRODUCED BY THE AO IN HIS ORDER, WHICH MAINLY CONTENDS AS UNDER:- I) THE CBDT IN ITS CIRCULAR DATED 10.03.2003 HAS CL EARLY DIRECTED TO THE AUTHORITIES THAT NO ATTEMPT SHOULD BE MADE TO OBTAI N THE ON-THE-SPOT DISCLOSURE OF INCOME DURING THE COURSE OF SURVEY TO AVOID MENACE OF OBTAINING FORCE CONFESSIONS. RELIANCE WAS PLACED O N THE DECISION IN THE CASE OF DCIT VS. M/S. PREMSONS (ITAT, MUMBAI), VINO D SOLANKI VS. UOI (SC), AND BHUVANENDRA, 303 ITR 235 (MAD). II) THE ASSESSEE CLAIMED THAT THE SURVEY PARTY FOUN D PHYSICAL STOCK OF GOLD ORNAMENTS OF 2948.360 GMS ONLY. ONLY SOME NOTINGS ON THE PAPERS WERE FOUND WHICH WERE WORKED OUT TO BE WEIGHING 818 9.000 GMS AND THE EXCESS STOCK FOUND IS NOT AS A RESULT OF ACTUAL INVENTORY OF PHYSICAL STOCK BUT THE PAPER CALCULATION OF THE ACTUAL STOCK . THUS, THE SO CALLED INVENTORY IS NOT ON BASIS OF WORKING OF PHYSICAL ST OCK, BUT SOME PAPER NOTINGS. III) SURVEY PARTY HAD ADMITTED THAT BOOKS OF ACCOUN T WERE FOUND IN THE PREMISES IN THE STATE OF READINESS. BESIDES, AT TH E YEAR END, THE ASSESSEE PRODUCED BOOKS OF ACCOUNTS DULY AUDITED AND NO FAUL T HAS BEEN FOUND THEREIN. ITA NO. 1456/AHD/2013 JAYANTI R. PAREKH VS. DCIT AY : 2009-10 3 IV) THE DISCLOSURE STATEMENT WAS GIVEN BY THE ASSES SEE WITHOUT CONSULTING THE RECORDS AND BASED ON PAPER WORKING. THEREAFTER , THE ASSESSEE RECONCILED THE BOOK STOCK POSITION AND FOUND THAT T HERE WERE NO EXCESS STOCKS AND BASED ON SOME WRITING IN THE REGULAR COU RSE OF BUSINESS, THEY HAVE BEEN EXTRAPOLATED INTO THE STOCK OF THE A SSESSEE AND UNDER THE UNFAVOURABLE SURVEY CIRCUMSTANCES, THE ASSESSEE WAS LEFT WITH NO CHOICE BUT TO ADMIT THE DISCLOSURE. THUS, THE DISC LOSURE WAS IN CONTRAVENTION OF BOTH THE SURVEY AND WITHOUT ALLOWI NG THE ASSESSEE TO VERIFY THE CORRECT POSITION AND THEN COME UP WITH A REPLY. THUS, THE SURVEY STATEMENT WAS NOT BINDING ON THE ASSESSEE. EXCEPT THE SURVEY STATEMENT, THERE IS NO PHYSICAL INVENTORY IN POSSES SION OF THE DEPARTMENT DESCRIBING THE ITEM AND WEIGHT OF THE JE WELLERY TO COME TO THE CONCLUSION THAT THE ACTUAL STOCK OF JEWELLERY O F 8189.00 GMS WAS FOUND BY THE SURVEY PARTY. THE SURVEY STATEMENT, BE ING NOT A BINDING STATEMENT, IS NOT BINDING UPON THE ASSESSEE. RELIA NCE IS PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF PU LLNGODE RUBBER PRODUCE CO. LTD VS. STATE OF KERALA, [1973] 91 ITR 18, JUDGMENT OF HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF POLA R MARMO AGGLOMERATED LTD VS. UNION OF INDIA, [1994] 73 ELT 536 (RAJ.) AND THE DECISION OF CUSTOMS, EXCISE AND GOLD TRIBUNAL IN TH E CASE OF ORIENTAL ENTERPRISES VS. COLLECTOR OF CUSTOMS, [1986] 23 ELT 507 (TRI.). V) FURTHER RELIANCE IS PLACED ON THE GOVERNMENT PRE SS NOTE DATED 07.12.1999 [(2000) 158 CTR (ST) 5], DIRECTING THE O FFICER NOT TO INDULGE IN COERCION OF THE ASSESSEE TO SURRENDER INCOME.. 3.1 THE AO, HOWEVER, RELYING ON THE SURVEY STATEMEN T MADE THE ADDITION. 4. AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL W HERE THE LD. CIT(A) CONFIRMED THE ADDITION. ITA NO. 1456/AHD/2013 JAYANTI R. PAREKH VS. DCIT AY : 2009-10 4 5. LD. COUNSEL FOR THE ASSESSEE CONTENDS AS UNDER:- (I) AS PER CBDT CIRCULAR DATED 10.03.2003, REVENUE AUTHORITIES ARE PROHIBITED FROM OBTAINING ON-THE-SPOT DECLARATION O F INCOME AT THE TIME OF SURVEY. (II) IN SUCH CIRCUMSTANCE, THE SURVEY PARTY SHOULD HAVE FORWARDED THE PAPER WORK PREPARED DURING THE COURSE OF SURVEY TO THE AO AND RECOURSE TO A PROPOSED ASSESSMENT. BESIDES, THE GOVERNMENT OF INDIA, VIDE ITS PRESS NOTE (SUPRA) HAS PROHIBITE D THE OFFICERS NOT TO COERCE THE ASSESSEE FOR DISCLOSURE AND WHILE DOI NG ACTION U/S 133A, NO ASSESSMENT OR ESTIMATE CAN BE MADE. (III) SURVEY STATEMENT IS NOT TAKEN ON OATH; THEREF ORE, IT IS NOT A BINDING PIECE OF EVIDENCE. (IV) EVEN IT IS ASSUMED THAT THE SURVEY STATEMENT H AS ANY EVIDENTIARY VALUE, THE ASSESSEE HAS THE RIGHT TO ASCERTAIN PROP ER FACTS AND POINT OUT THAT THE STATEMENT WAS GIVEN UNDER MISIMP RESSION AND THERE IS EVIDENCE TO SUGGEST THAT THE NEW CHANGED V ERSION OF THE ASSESSEE IS CORRECT. RELIANCE IS PLACED ON HONBLE SUPREME COURT JUDGMENT IN THE CASE OF PULLNGODE RUBBER PRODUCE CO MPANY LTD (SUPRA). (V) LD. AO, WHILE MAKING THE ASSESSMENT, HAS FAILED TO CONTROVERT THE ASSESSEES CLAIM THAT NO PHYSICAL STOCK/INVENTORY W AS PREPARED, BUT THE EXCESS STOCK WAS WORKED OUT ON THE BASIS OF SOME PAPER WORK IN THE NAME OF PHYSICAL INVENTORY. IN THE ABS ENCE OF CONTROVERTING THIS FACT, THE AOS SOLE RELIANCE ON UNBINDING SURVEY STATEMENT IS ARBITRARY AND UNTENABLE. 6. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. ITA NO. 1456/AHD/2013 JAYANTI R. PAREKH VS. DCIT AY : 2009-10 5 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. A PERUSAL OF ORDERS SHOWS THAT THERE IS NO REFERENCE TO ANY A NNEXURE OR SPECIFIC INVENTORY OF EXCESS STOCK. THE ASSESSEE DURING THE COURSE OF PROCEEDINGS TOOK A PLEA THAT THE ALLEGED EXCESS STOCK WAS NOT W ORKED OUT ON THE BASIS OF ACTUAL VERIFICATION OF JEWELLERY, BUT ON THE BASIS OF SOME PAPER WORK. THE CONTENTIONS OF THE ASSESSEE HAVE NOT BEEN CONTROVER TED. IN THE ABSENCE OF ANY MATERIAL ON RECORD ABOUT THE NATURE/WORKING OF THE ALLEGED STOCK INVENTORY, IT IS NOT POSSIBLE TO VERIFY WHETHER THE ACTUAL EXCESS PHYSICAL STOCK WAS FOUND OR THE WORKING IS BASED ON SOME PAP ER WORK. WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL THAT THE SURVEY STATEMENT IS NOT A BINDING PIECE OF EVIDENCE AND AT THE MOST IT CONSTI TUTES AN INFORMATION ON WHICH THE ASSESSEE HAS RIGHT TO RESPOND AND PUT FOR WARD ITS CLAIM. THIS EXERCISE SEEMS TO HAVE BEEN NOT PROPERLY UNDERTAKEN . IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE ARE INCLINED TO SET ASIDE THE GROUND RAISED BY THE ASSESSEE TO THE FILE OF THE ASSESSING OFFICER TO DE CIDE THE SAME AFRESH AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE A SSESSEE AND VERIFYING THE ACTUAL STOCK OF INVENTORY AND THE FACTS AS TO W HETHER THE EXCESS PHYSICAL STOCK WAS ACTUALLY COUNTED AND WORKED OUT ON THE BA SIS OF SOME CALCULATION. THE ASSESSING OFFICER IS EXPECTED TO PASS A SPEAKIN G ORDER IN ACCORDANCE WITH LAW KEEPING IN MIND OUR OBSERVATIONS. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 11 TH NOVEMBER, 2016 AT AHMEDABAD. SD/- SD/- (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER (R.P. TOLANI) JUDICIAL MEMBER AHMEDABAD; DATED 11/11/2016 *BIJU T., SR. PS ITA NO. 1456/AHD/2013 JAYANTI R. PAREKH VS. DCIT AY : 2009-10 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD